Bitcoin Market Update 5/2

Hi Everyone,

This week bitcoin traded between $460/BTC and $430/BTC ending at $450/BTC.  With the exception of a brief moment during the middle of the week which saw the price dipping to under $430/BTC, volatility has been low this week.  Not much action in the markets this week though a couple of distinct bots have joined Bitstamp's book.

News this week includes:
  • MIT Bitcoin Project will give $100 of BTC to each student with the aim of creating a digital currency microcosm.
  • Bloomberg now shows bitcoin prices and charts due to popular demand from their clients.
  • Chinese bitcoin exchange FXBTC shuts down due to central bank pressure.
  • DarkWallet, a privacy-centric bitcoin wallet, releases it's alpha version.
  • OpenBazaar branches off DarkMarket, a proof-of-concept anonymous and decentralized marketplace (essentially a distributed version of SilkRoad).
  • Investor group Sunlot Holdings announces proposal for revitalization of mtgox.
Regarding the Sunlot proposal for gox, the details are as follows:
  • In the proposal, customers (creditors) of gox would own 16.5% of the new entity.
  • Of the 200k BTC gox has remaining in it's vaults, it will be pro-rata distributed to all customers/creditors with a lock-in period of 1 year.
  • Of the fees collected by the new gox, 50% will go towards operational costs and 50% will go towards making creditors whole.
  • $10mm of gox's remaining fiat will be used to conduct forensic investigations and prosecute perpetrators of the hack/theft.
  • 10% of any recovered assets will be awarded to those participating in its recovery as an incentive bounty.
Some argue that Sunlot is essentially giving themselves or their buddies $10mm to look for lost coins and then get a 10% cut of anything that's found.  Some suggest that Karpeles might even accidentally find a long-lost wallet himself.  Other than suspicions of vulture capitalism by Sunlot, the proposal seems reasonable if and only if revitalization is superior to liquidation which isn't obvious.  Arguments against liquidation include that gox might spend years in liquidation (especially since courts or officials responsible for the liquidation process likely have little expertise in bitcoin) before creditors get their money back and by going with a revitalization plan, creditors can get their fiat and BTC faster.  It's unclear which path is better though I personally favor a quick liquidation officially masked as restructuring but perhaps with a different and more favorable proposal than the Sunlot proposal.

DarkWallet is the latest in innovative developments in the bitcoin world.  Features include the following:
  • Ultra-light-weight (Uses something called obelisk servers for all blockchain queries bypassing the need to initially download and verify the blockchain history. Headers can be downloaded in the background for simplified payment verification (SPV) without compromising immediate use given some level of trust of the obelisk server.)
  • Hierarchical Deterministic Wallets (allows the same functionality as Electrum where a user a wallet with unlimited addresses can be generated from a 12 word seed. Also see BIP32)
  • Multi-sig
  • Pockets (basically the ability to sub-divide your wallet into sub-wallets or pockets
  • Chat channel (hosted on an obelisk server)
  • Identity and contact management
  • Stealth Addresses (I talked about this in one of my earlier newsletters)
  • Automated mixing (CoinJoin:
Given the various desktop personal wallets currently available, DarkWallet will be a strong contender going forward.  On an aside, for mobile wallets I like Mycelium.

Lastly, if you don't already know, Buttercoin is currently in private beta.  If you would like to join our platform, please send me a line and I'll help set you up.  Also, thank you everyone for your overwhelmingly positive feedback on my weekly updates.  It encourages me to continue writing them every week to know that there is an active audience who reads them.  Also feel free to pass them around to anyone who might be interested.

Kevin & Team Buttercoin
Bitcoin Trading Made Easy | 

Buttercoin currently in Private Beta, if you'd like access right now apply here